When it comes to business practices that are pertinent to strategy and future growth, spend management often ranks as one of the topmost priorities for several entities.
Spend management helps businesses keep track of their active and past transactions, purchase orders and expenditures across specific departments - all of which is indispensable information for any organization.
Spend management is an essential part of every successful business
Keeping track of spending helps you and your business budget expenses, but it also causes you to take a closer look at where your money is being spent. This allows you to assess how much value you are garnering from the overall spending that is being done collectively across segments.
In addition to that, this approach also helps you assess the pertaining supplier relationship management (SRM), an integral part of analyzing which suppliers are critical to your daily functions. This model, introduced by Peter Krajlic in 1983, has since become crucial to understanding a business's expenses, as well as its larger relationship, risk and profitability tied to a supplier.
When it comes to finding a spend management software, you have to ensure that it does not only process procurement transactions, but also shows the collected data in a format that could be easily discernible with the aforementioned model in mind.
The key factors that make for a great spend management software
Keeping track of transactions is not the only thing that a good spend management software is supposed to do. It also performs various functions across several segments, ranging from purchasing to the delivery of segmented data for the purpose of analysis and strategy.
- The purchasing process
- Source pricing and inventory information across various suppliers.
- Automate processes such as purchasing and contracting.
- Execute transactions in a timely manner.
- Define the terms of said transactions and relay them to all
- The data recording process
- Record transaction data for simple spending statistics.
- Tie the transactions according to specific departments of a business.
- Determine the frequency of transactions performed with various suppliers.
- The data delivery process
- Share up-to-date data across all stakeholders on multiple devices.
- Consolidate the data into segments that could be easily discernible.
- Present the data as holistic findings as well as an individual set of information.
How to decide on a spend management software
Your next step should be to determine how interoperable the solution is going to be within your organization and your suppliers, and what kind of value it brings to the table. Considering that it fulfills the expectations on that front as well, the next step should be to determine how efficient it is going to be.
Should issues be expected? If yes, then where? If not, then what would be your contingency plan in case the software runs into unplanned issues?
The next item on the agenda should be the user interface. If the platform is not easy to navigate through and not aesthetically pleasing to look at, then it might not engage your employees during when placing orders or during the data assessment process - both of which are crucial to a spend management model.
Lastly, if possible, have a discussion with the team who developed the software or at least the people who represent customer service. Prepare your own set of questions for the software organization and conduct interviews as though the software is going to be working at your organization (which it is). Assess the team's skill set, compare that and its software to your existing solutions, if any, and go ahead with selecting them for a trial period (it should be available in one form or another).
By ensuring that you have analyzed the software through all possible means and with the perspective of how an effective spend management software should work, there should not be any reason why the spend management software that made it through this vetting list would not perform to its optimal capacity.